April 24, 2008

FHA MODERNIZATION BILL UPDATE

April 10, 2008
Senator Claire McCaskill (D-MO) was successful at getting her reverse mortgage bill (S. 2490) added to S. 3221. The Reverse Mortgage Protection Proceeds Act would prohibit lenders from requiring the purchase of an annuity with the proceeds of a reverse mortgage and require HUD to pay for mandatory HECM counseling out of the mortgage insurance fund. It also would create requirements for financial service companies that offer reverse mortgages and other products to have “firewalls and safeguards” between their various lines of business.

The House is assembling its own, potentially broader alternative tax bill, starting with a package of housing-related tax breaks (HR 5720) approved April 9 by the Ways and Means Committee chaired by Rep. Charlie Rangel (D-NY). Both the Senate and House measures include provisions aimed at helping home¬owners refinance their mortgages.
Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, is expected to sponsor a broader housing bill that would allow the FHA to insure refinanced mortgages if lenders agree to cut the outstanding principal on the loan to reflect the reduced value of a property. Frank said his committee will mark up his FHA legislation on April 24. We’re working to make sure our HECM provisions will be incorporated into whatever bill emerges from this mark-up. Rep. Barbara Lee (D-CA) has also introduced a reverse mortgage bill (HR 5758) that is modeled after Senator McCaskill’s legislation (S. 2490). It’s quite possible that Chairman Frank will incorporate HR 5758 into his housing bill.
NRMLA is working with Chairman Frank and Chairman Dodd to get our HECM language included in whatever bill is ultimately passed in the end. Our best assessment right now is that Congressman Frank will take the bill his committee marks-up this week to the House floor and attempt to get it passed with several other bills, including FHA Modernization (with the HECM amendments), as part of a large overall housing package, probably during the first or second week of May.
The FHA Modernization language will include:
• Permanently removal of the FHA reverse mortgage volume cap.
• Allow HECM reverse mortgages to be utilized for home purchase.
• Allow HECM reverse mortgages to be used on cooperatives
• Raising the FHA reverse mortgage lending limits. This limit is currently being negotiated. Minimally we expect it to be $417,000.
Partial reprint from NRMLA Washington Update, author Darryl Hicks.
For up to date information on the latest reverse mortgage products and a customized search for a product appropriate for your needs, contact Angella Conrard, Reverse Mortgage Advisor directly at 866-949-7030.

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FHA MODERNIZATION BILL UPDATE

April 10, 2008
Senator Claire McCaskill (D-MO) was successful at getting her reverse mortgage bill (S. 2490) added to S. 3221. The Reverse Mortgage Protection Proceeds Act would prohibit lenders from requiring the purchase of an annuity with the proceeds of a reverse mortgage and require HUD to pay for mandatory HECM counseling out of the mortgage insurance fund. It also would create requirements for financial service companies that offer reverse mortgages and other products to have “firewalls and safeguards” between their various lines of business.

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Senior/Elder Health Links

reverse mortgages help seniors strapped for cashMore seniors are turning to a reverse mortgage loans these days. A reverse mortgage is a loan that allows seniors to tap into their home equity and use the money to pay for things such as medical bills, groceries and even home repair.

FHA is overwelmed with condo projects to be approvedHUD, did away with condo projects ability to be approved with "Spot Condo" proceedures to get a better hold of the data of how many FHA loans exist in what projects. Approvals are adding another month in the process of attaining a reverse mortgage for condo owners.

Older American Home Values are flatteningGolden Gateway Financial released new usage data from its online reverse mortgage calculator showing that average home values for older Americans have halted their slide after remaining flat or declining for seven consecutive quarters.

A new survey from the Center for Retirement Research at Boston College found that 40 percent of individuals 45-59 expect to retire later than they had before the downturn, with most of the respondents intending to work an additional four or more years before retirement.

Financial Planning Exchange ForumThis is an excellent forum, set up by my friend Bryan Wisda who has a passion in helping seniors and people with finances in general

Obama to Promote Annuities and Other Forms of Guaranteed Life IncomeThe Department of Labor and the Department of the Treasury (the “Agencies”) are soliciting comments whether the agencies could or should enhance the use of lifetime income or other arrangements designed to provide a stream of income after retirement.
One of the questions is related to reverse mortgages:
What are the advantages and disadvantages of approaches that combine annuities with other products (reverse mortgages, long term care insurance), and how prevalent are these combined products in the marketplace?
Why the sudden interest in how the government can enhance the use of lifetime income arrangements?
The New York times recently reported that the Obama Administration is promoting annuities as a tool to give Americans a better shot at a more secure retirement.

Is Reverse Mortgage Interest Deductable?Reverse Mortgage interest deduction rules are the same for traditional loans and for reverse mortgages:
Reverse mortgages are meant for the elderly who will most likely be paying their mortgage and the accrued interest only after they die so the interest deduction is usually just an afterthought. Upon death and on their personal tax returns mortgage interest may be deductible for the original acquisition debt interest, home improvement debt interest and possibly up to $100k of debt on the home for any other use but not deductible for AMT (but it probably won't make that much of a dent in their personal taxes)
Qualified Residence Interest Expense.